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Ratios and Definitions
- Market Price Analysis
- Profitability Analysis
- Liquidity Analysis
- Cash Flow Analysis
- Capital – Leverage Analysis
- Activity Analysis
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Profitability Analysis
Measures financial performance
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Return on Equity Ratio – Net income divided by average stockholders’
equity.
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ROE – DuPont Formula Ratio –
Net income divided by average stockholders’ equity = (net income /
sales) times (sales / total assets) times (total assets / total
equity).
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Return on Assets Ratio – Net income divided by average total assets.
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Gross
Profit Margin – Gross profit divided by sales.
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Operating Profit Margin – Operating profit divided by sales.
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Net Profit Margin –
Net income divided by sales.
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